Lending a helping hand: two governments can work together.

(17) Beyond the point at which the electronic return is received by the state tax agency, administration proceeds separately, with each level responsible for any further contact it might have with the taxpayer. A federal law enacted in 1976 authorized the federal government to administer state income taxes for states that agreed to adopt the federal income tax base (among other conditions). No state has availed itself of this opportunity, and the provision was repealed in 1992 as an unused and unnecessary piece of federal law.

(18) FTA calculation based on information provided by the states.

(19) The Federation of Tax Administrators is an association of the principal tax administration agencies in each of the states, the District of Columbia and New York City.

(20) The legislation that modifies a state's sales and use tax laws to achieve the simplification and uniformity required by the participating states is referred to as the Streamlined Sales and Use Tax Agreement ("the Agreement").

(21) For example, see S.1736, S.2152 S.2153, and H.R. 3184.

(22) Both businesses and individuals are required to collect use taxes. For all practical purposes, however, the use tax is not enforced on individuals except for items, such as an automobile, that must be registered with the state. Businesses are frequently the target of use tax audits, however.

(23) Bruce and Fox (2004) examine states' sales tax revenue losses as a result of electronic commerce and estimate that these losses will range between $21.5 billion and $33.7 billion by 2008.

(24) There have been other ideas for solving the problem of taxing remote sales, including a national sales tax; however, these proposals result in a greater loss of fiscal autonomy.

(25) H.R. 1956, the "Business Activity Tax Simplification Act of 2005" was re-introduced in the 109th Congress on April 28, 2005. The Senate version, S. 2721, was introduced on May 4, 2006.

(26) Refer to the Multistate Tax Commission web site at http://www.mtc.gov/About.aspx?id=40.

(27) For example, the IRS "Son of Boss" initiative ran from May 5, 2004 through June 21, 2004 and offered reduced penalties to taxpayers that voluntarily came forward and disclosed their participation in the tax planning scheme.

(28) See Luna, Brown, Mantzke, Tower, and Wright (2006) for a detailed discussion of the differences between these amnesty programs.

(29) The Multistate Tax Commission has been very effective in promoting uniformity in state taxation. For an excellent discussion, see Hildreth et al. (2005).